Darden Restaurants, Inc. (DRI)

DRI 
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Industry: Consumer Services
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Darden Restaurants (DRI)

Q1 2013 Earnings Call

September 21, 2012 8:30 am ET

Executives

Matthew Stroud - Vice President of Investor Relations

C. Bradford Richmond - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Andrew H. Madsen - President, Chief Operating Officer and Director

Clarence Otis - Executive Chairman, Chief Executive Officer and Chairman of Executive Committee

Analysts

David Palmer - UBS Investment Bank, Research Division

Jeffrey F. Omohundro - Davenport & Company, LLC, Research Division

John S. Glass - Morgan Stanley, Research Division

Michael Kelter - Goldman Sachs Group Inc., Research Division

Brian J. Bittner - Oppenheimer & Co. Inc., Research Division

Jeffrey Andrew Bernstein - Barclays Capital, Research Division

Joseph T. Buckley - BofA Merrill Lynch, Research Division

Andrew M. Barish - Jefferies & Company, Inc., Research Division

John W. Ivankoe - JP Morgan Chase & Co, Research Division

Alvin C. Concepcion - Citigroup Inc, Research Division

Priya Ohri-Gupta - Barclays Capital, Research Division

Jason West - Deutsche Bank AG, Research Division

Presentation

Operator

Welcome, and thank you for standing by. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. After the presentation, we will begin the question-and-answer session.

I would now like to turn the meeting over to your host, Matthew Stroud.

Matthew Stroud

Thank you, Sherry. Good morning, everyone. With me today are Clarence Otis, Darden's Chairman and CEO; Drew Madsen, Darden's President and COO; Brad Richmond, Darden's CFO; and Gene Lee, President of Darden's Specialty Restaurant Group. We welcome those of you joining us by telephone or the Internet.

During the course of this conference call, Darden Restaurants' officers and employees may make forward-looking statements concerning the company's expectations, goals or objectives. Forward-looking statements are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of the date on which such statements are made, and we make -- undertake no obligation to update such statements to reflect events or circumstances arising after such date.

We wish to caution investors not to place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties that could cause actual results to materially differ from those anticipated in the statements. The most significant of these uncertainties are described on Darden's Form 10-K, Form 10-Q and Form 8-K reports, including all amendments to those reports.

These risks and uncertainties include food safety and food-borne illness concerns; litigation; unfavorable publicity; risks relating to public policy changes and federal, state and local regulation of our business, including health care reform, labor and insurance costs; technology failures; failure to execute a business continuity plan following a disaster; health concerns including virus outbreaks; intense competition; failure to drive sales growth; failure to successfully integrate the Yard House business and the additional indebtedness incurred to finance the Yard House acquisition; our plans to expand our newer brands like Bahama Breeze, Seasons 52 and Eddie V's; a lack of suitable new locations -- restaurant locations; higher-than-anticipated costs to open, close or remodel restaurants; a failure to execute innovative marketing tactics and increased advertising and marketing costs; a failure to develop and recruit effective leaders; a failure to address cost pressures, shortages or interruptions in the delivery of food and other products; adverse weather conditions and natural disasters; volatility in the market value of derivatives; economic factors specific to the restaurant industry and general macroeconomic factors, including unemployment and interest rates, disruptions in the financial markets, risks of doing business with franchisees and vendors in foreign markets; failure to protect our service marks or other intellectual property; a possible impairment in the carrying value of our goodwill or other intangible assets; a failure of our internal controls over financial reporting or changes in accounting standards; and other factors and uncertainties discussed from time to time in the reports filed by Darden with the Securities and Exchange Commission.

A copy of our press release announcing our earnings, the Form 8-K used to furnish the release to the Securities and Exchange Commission and any other financial and statistical information about the period covered in the conference call, including any information required by Regulation G, is available under the heading Investor Relations on our website at darden.com.

We plan to release fiscal 2013 second quarter earnings and same-restaurant sales for fiscal September, October and November 2013 on Thursday, December 20, 2012, before the market opens, with a conference call shortly after. Also, we are planning to host our annual analyst and investor meeting here in Orlando on February 25 and 26, 2013. More details would be available soon.

We released first quarter earnings results this morning. These results were available on PR Newswire and other wire services. We recognize that most of you have reviewed our first quarter earnings results, so we won't take time to go through them in detail once again in an effort to provide more time for your questions. We will offer a line item summary of the P&L, discuss our financial outlook for fiscal 2013 and discuss our brand-by-brand operating performance summary.

To begin, Brad will provide detail about the financial results for the first quarter. Drew will review the operating performance of the brands, and Clarence will offer some closing comments. We will then respond to your questions.

With that, let me turn it over to Brad.

C. Bradford Richmond

Thank you, Matthew, and good morning. Darden's total sales from continuing operations increased 4.8% in the first quarter to $2.03 billion. Our blended same-restaurant sales base -- on a blended same-restaurant sales basis, results for Red Lobster, Olive Garden and LongHorn Steakhouse declined 0.3% in the first quarter. We saw continued strong same-restaurant sales gains in our Specialty Restaurant Group, with a 2.2% same-restaurant sales growth on a blended basis.

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